The new window opened by the government for PSUs to raise external commercial borrowings (ECBs) for working capital needs is not likely to be used in a hurry. Top functionaries from a host of PSUs, expected to be at the forefront of the new ECB drive due to their relatively strong balance sheets, have indicated that they are not in a hurry to raise money abroad given the global market conditions and their own assessment of the need for (and cost of) foreign capital at this time.

Except IOC, none of the large PSUs FE spoke to said they were eyeing the ECB route for working capital. This implies that the target of an extra $4 billion capital inflows through this route, set by a government trying a variety of options to stem the rupee’s headlong fall, would turn out to be difficult.

KV Rao, executive director, corporate finance at HPCL, told FE the company would take the wait-and-watch approach. “Economic conditions are volatile and, therefore, we will not immediately look to borrow (from overseas). Also, with hedging costs at 8-8.5%, the total cost of overseas borrowings will not be all that attractive at around 10-11%,” he said.

In a similar vein, AK Banerjee, director (finance), ONGC, said the company was not immediately contemplating any working capital borrowings. However, he said, OVL, the overseas ventures arm of the state-run hydrocarbon explorer, might need to raise funds to fund its Mozambique acquisition. Overseas lenders could hike rates and hedging costs might go up further considering the prevailing economic conditions, making the arbitrage of overseas borrowing much lower, Banerjee believes. Nevertheless, he said, it might not be a bad time to borrow overseas if one looks at it from the currency perspective. “If the rupee appreciates from the current lows, the overseas borrower at this juncture might actually benefit,” he added.

Steel major SAIL, too, is not mulling any immediate fund-raising. Chairman CS Verma told FE: “We have Rs 25,000 crore as cash reservs.s At the moment, we will not raise any funds (domestically) and not go for ECBs either.”

Coal India, which is also sitting on cash reserves, doesn’t see the need for ECBs for working capital, but its chairman S Narsing Rao indicated the company might tap overseas funds for likely acquisitions of foreign coal mines. CIL hunting for overseas coal assets to meet the shortfall in domestic production. It is